Seitel Holdings 2007 Stock Option Plan











Exhibit 10.3

 

AS AMENDED (INCLUDING ALL AMENDMENTS AS OF JUNE 30,
2008)

 


 


SEITEL HOLDINGS, INC.


2007 NON-QUALIFIED STOCK OPTION PLAN

EFFECTIVE FEBRUARY 14, 2007

 




1.               
Purpose of Plan.  This 2007 Non-Qualified Stock Option Plan (the
"Plan") of Seitel Holdings, Inc., a Delaware corporation (the "Company"),
is designed to provide incentives to such present and future Employees of the
Company or its Subsidiaries, as may be selected in the sole discretion of the
Committee, through the grant of Options by the Company to Participants.  This
Plan is intended to advance the best interests of the Company by providing
those persons who have a substantial responsibility for its management and
growth with additional incentives by allowing them to acquire an ownership
interest in the Company and thereby encouraging them to contribute to the
success of the Company and to continue to provide services to or remain
employed by the Company and its Subsidiaries (as the case may be).  The
availability and offering of Options under the Plan also increases the
Company's ability to attract and retain individuals of exceptional managerial
talent upon whom, in large measure, the sustained progress, growth and
profitability of the Company depends.  All options granted under the Plan are
intended to qualify for an exemption (the "Exemption") from the
registration requirements under the Securities Act, pursuant to Rule 701 of the
Securities Act.  In the event that any provision of the Plan would cause any
option granted under the Plan to not qualify for the Exemption, the Plan shall
be deemed automatically amended to the extent necessary to cause all Options
granted under the Plan to qualify for the Exemption.


2.                
Definitions.  Certain terms used in this Plan have the meanings
set forth below:


"Agreement"
means the agreement between the Company and a Participant pursuant to which an
Option is granted and which specifies the terms and conditions of that Option,
including the vesting requirements applicable to that Option.  All Options
granted under the Plan shall be evidenced by Agreements.


"Approved Sale"
shall have the meaning ascribed to such term in the Securities Holders
Agreement.


"Board" means
the Company's board of directors.


"Cause" shall
have the meaning ascribed to such term in the applicable Employment Agreement,
or if none, the Securities Holders Agreement.


"Common Stock"
means the Company's Common Stock, par value $0.001 per share.


"Code" means
the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder, as the same may be amended from time to time and any successor
statute.


"Committee"
means the Board or a committee of the Board designated to administer the Plan. 
Upon the consummation of a Public Offering the Committee shall be composed of
two or more directors appointed by the Board, each of whom shall be a
"non-employee director" as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and an "outside director" as
defined in Section 162(m) of the Code. 


"Disability"
has the meaning set forth in the applicable Employment Agreement between the
Participant and the Company, or if none, the Securities Holders Agreement.

"Employee" means
a senior executive employee of the Company and/or any of its Subsidiaries
listed on Schedule A hereto.  Notwithstanding the foregoing, the Board may, in
its sole discretion, designate such other service providers, including without
limitation, other employees, directors and/or consultants, of the Company
and/or its Subsidiaries, as Employees for purposes of participation in the
Plan. 

"Employment Agreement" means the
employment agreement by and between a Participant and the Company and/or any of
its Subsidiaries or Affiliates as appropriate, as in effect from time to time.


"Employment
Termination Date" means the first date on which a Participant is no longer
employed by the Company or its Subsidiaries for any reason.


"Fair Market
Value" of the Option Shares shall mean the fair market value of the Option
Shares as determined in good faith by the Committee.

"Investor" means
ValueAct Capital Master Fund, L.P., a British Virgin Islands limited
partnership, or any Successor thereto.

"Non-Qualified Stock
Option" means an option which is not intended to constitute an "Incentive
Stock Option" within the meaning of Section 422 of the Code.


"Option"
means a Non-Qualified Stock Option to purchase Common Stock of the Company
granted pursuant to the Plan which has an exercise price no less than the Fair
Market Value of the underlying Common Stock on the date of grant and has a term
of no more than ten years.


"Participant"
means an Employee who is granted an Option hereunder. 


"Person"
means an individual, a partnership, a corporation, a limited liability company,
an association, a joint share company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.


"Public Offering"
shall have the meaning ascribed to such term in the Securities Holders
Agreement.


"Securities Act"
means the Securities Act of 1933, as amended, and any successor statute thereto.


"Securities
Holders Agreement" or "Stockholders' Agreement" means the Securities
Holders Agreement by and among Seitel Holdings, LLC, Valueact Capital Master
Fund, L.P., and the Management Investors identified therein, dated January 8,
2007, as amended from time to time.


"Subsidiary"
means any corporation (other than the Company), partnership, joint venture or
other business entity of which 50% or more of the outstanding voting power is
owned, directly or indirectly, by the Company.


"Successor"
means: (i) a "Permitted Transferee" as defined in the Securities Holders
Agreement, (ii) the legal representative of the estate of a deceased
Participant or (iii) the Person or Persons who shall acquire the right to
exercise an Option by bequest or inheritance or other transfer or by reason of
the death of the Participant or (iv) Persons who shall acquire the right to
exercise an Option on behalf of the Participant as the result of a
determination by a court or other governmental agency of the incapacity of the Participant.


Capitalized terms
used in this Plan and not defined herein shall have the meanings ascribed
thereto in the Securities Holders Agreement.


3.                
Administration of the Plan.

(i)                
The Plan shall be administered by the Committee, which shall have full
power to interpret and administer the Plan and full authority to act in
selecting the Employees to whom Options will be granted, in executing
Agreements with Participants under the Plan, in determining whether, and to
what extent, Options may be transferable by the Participant in accordance with
the Securities Holders Agreement, in determining the amount of Options to be
granted to each such Employee, and in determining the terms and conditions of
Options granted under the Plan. 


(ii)               
Subject to the other terms of the Plan, the Committee shall, in its
discretion as reflected by the terms of the applicable Option Agreement:  (i)
determine from time to time those eligible Employees to whom Options are to be
granted and the number of shares subject to each such Option; (ii) determine
the time or times when and the manner and condition in which each Option shall
vest or become exercisable and the duration of such exercise period, if
applicable; and (iii) determine or impose other conditions to the receipt of
Common Stock subject to the Option under the Plan as it may deem appropriate. 


(iii)              
The Committee may condition the vesting or exercise of an Option upon:
(i) the Employee's continued service over a period of time with the Company or
its Subsidiaries, or (ii) any combination of the above conditions, as specified
in the Agreement.  If the specified conditions are not attained, the
Participant shall forfeit the portion of the Option with respect to which those
conditions are not attained, and the underlying Common Stock shall be forfeited
to the Company.  


(iv)               The Committee shall have the power to adopt regulations for carrying out
the Plan and to make changes to such regulations as it shall, from time to
time, deem advisable.  Any interpretation by the Committee of the terms and provisions
of the Plan and the administration thereof, and all actions taken by the
Committee, shall be final and binding on Participants and Successors, if
applicable.


4.                
Shares of Common Stock Subject to the Plan.  


(i)                
Subject to adjustment as provided in Section 6 hereof, 92,898 shares
(equal to 8.5% of the Company's Common Stock on a fully diluted basis on the
date this Plan is adopted by the Board) shall be available for Option grants
under the Plan.


(ii)               
Any shares issued by the Company through the assumption or substitution
of outstanding grants from an acquired company shall not reduce the shares
available for Options under the Plan.  Any shares issued hereunder may consist,
in whole or in part, of authorized and unissued shares or treasury shares.  If
any shares subject to an Option granted hereunder are forfeited or such Option
otherwise terminates, the shares subject to such Option, to the extent of any
such forfeiture or termination, shall again be available for Options under the
Plan.


5.                
Listing, Registration and Compliance with Laws and Regulations. 
Each Option shall be subject to the requirement that if at any time the
Committee shall determine, in its discretion, that the listing, registration or
qualification of the shares subject to the Option upon any securities exchange
or under any federal, state or foreign securities or other law or regulation,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition to or in connection with the granting of such Option
or the issue or purchase of shares thereunder, no such Option may be exercised
or paid in shares of Common Stock in whole or in part unless such listing,
registration, qualification, consent or approval (a "Required Listing")
shall have been effected or obtained, and the Participant of each such Option
will supply the Company with such certificates, representations and information
as the Company shall request which are reasonably necessary or desirable in
order for the Company to obtain such Required Listing, and shall otherwise
cooperate with the Company in obtaining such Required Listing.  The Company
agrees to use commercially reasonable efforts to effect or obtain any Required
Listing.  


6.               
Adjustment for Change in Common Stock.  In the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation or other change in Common Stock (or Common Stock
generally), the Committee shall make appropriate changes in the number and type
of shares authorized by this Plan, the number and type of shares covered by
outstanding Options and the prices specified therein.


7.                
Taxes.  The Company shall be entitled, if necessary or desirable,
to withhold (or secure payment from the Participant in lieu of withholding) the
amount of any withholding or other tax due from the Company with respect to any
amount payable and/or shares issuable under this Plan, and the Company may
defer such payment or issuance unless indemnified to the Board's satisfaction. 
In any event, each Participant shall be required to indemnify the Company and
hold it harmless for any and all withholding and similar tax obligations
arising as a result of the grant or exercise of Options hereunder or the
issuance of any Common Stock upon exercise of the Options.


8.                
Termination and Amendment.  The Committee at any time may suspend
or terminate this Plan and make such additions or amendments as it deems
advisable under this Plan (except that it may not extend the term of this
Plan); provided that, subject to the other provisions hereof, the
Committee may not change any of the terms of a Participant's Agreement in a
manner which would have a material adverse effect on the Participant without
such Participant's consent.  Notwithstanding the foregoing, any amendment to
the Securities Holders Agreement that affects a provision contained herein
shall be deemed to be an amendment to the Plan.  To the extent any such
amendment to the Securities Holders Agreement affects the terms of a
Participant's Agreement, the Participant and any Successor shall be deemed to
have consented to that amendment. No Options shall be granted or Common Stock
issued hereunder after January 30, 2017. 


9.                
Participant Acknowledgments.  In connection with the grant of any
Option and/or the issuance of any Common Stock pursuant to this Plan, each
Participant acknowledges and agrees, that as a condition to any such grant or
issuance:


(i)                
The Company will have no duty or obligation to disclose to any
Participant, and no Participant will have any right to be advised of, any
material information regarding the Company or its Subsidiaries at any time
prior to, upon or in connection with the Company's exercise of any repurchase
rights in the Securities Holders Agreement, with respect to any Option or
Common Stock acquired upon the exercise of an Option. 


(ii)               
Such Participant will have consulted, or will have had an opportunity to
consult with, independent legal counsel regarding his or her rights and
obligations under this Plan and any written agreement evidencing any grant of
any Option or the issuance of any Common Stock and he or she fully understands
the terms and conditions contained herein and therein.


(iii)              
Each Participant shall acknowledge the restrictive covenants contained
in his or her Employment Agreement and/or the Securities Holders Agreement.


10.              
Application of Securities Holders Agreement; Restrictions on Transfer.


(i)                
Each Participant and his Permitted Transferees shall be required to join
the Securities Holders Agreement and agree to be subject to its terms upon
receipt of an Option and/or exercise of an Option granted hereunder.


(ii)               
Except as provided below, Options may not be pledged, assigned or
transferred for any reason during the Participant's lifetime, and any attempt
to do so shall be void and the relevant Option shall be forfeited.  The
Committee may grant Options that are transferable by the Participant during his
lifetime, but such Options shall be transferable only to the extent
specifically provided in an agreement entered into with the Participant or in
the Securities Holders Agreement.  The transferee of the Participant shall, in
all cases, be subject to the Plan, the Securities Holders Agreement and the
provisions of the Agreement between the Company and the Participant.


(iii)              
An Employee, or if applicable a Successor, who receives an Option shall
be bound by the Securities Holders Agreement to the same extent as would a
"Management Investor", as that term is defined in the Securities Holders
Agreement, and all Common Stock acquired hereunder shall be an "Incentive
Security" within the meaning of the Securities Holders Agreement.  Accordingly,
except as is otherwise provided in an Agreement, any Option or Common Stock
acquired upon the exercise of an Option shall be held, transferred, sold or
otherwise disposed of only in accordance with the Securities Holders
Agreement.  Without limiting the generality of the foregoing, each Participant
and any Successor shall comply with the provisions set forth in the Securities
Holders Agreement with regard to an Approved Sale, as well as be bound by any
transfer restrictions, restrictive covenants and other obligations delineated
in the Securities Holders Agreement.  Any rights of a "Management Investor"
under the Securities Holders Agreement will be available to a Participant or
Successor only in respect of any portion of an Option which is then vested.  In
addition, and notwithstanding anything to the contrary herein, any Option will,
regardless of whether Common Stock subject to such Option is subject to
restrictions or conditions or whether such shares or stock are vested under the
applicable terms of the Plan or Agreement, be subject to the Repurchase Option
of the Company upon any termination of the Employee's employment with the
Company or any Subsidiary in accordance with the terms of the Securities
Holders Agreement.   


11.              
Approved Sale, Public Offering or Other Corporate Transaction


(i)                
Notwithstanding any provision in this Plan to the contrary and unless
otherwise provided in the applicable Participant's Agreement, in the event (a)
of an Approved Sale, (b) of a Public Offering, (c) a "change in control" as
defined in the applicable Participant's Agreement  or determined by the
Committee in its sole discretion(each, a "Transaction"), the Committee
may, in its sole discretion:


        (a)               
accelerate the exercisability of all or a portion of Options to the
extent the Committee deems appropriate,


        (b)              
cancel all outstanding vested Options in exchange for a cash payment in
an amount equal to the excess, if any, of the Fair Market Value of the Common
Stock underlying the unexercised portion of the Option as of the date of the
Transaction over the exercise price of such portion,


        (c)               
terminate all Options immediately prior to the Transaction, provided
that the Company provide the Participant an opportunity to exercise the Option
within a specified period following the Participant's receipt of a written
notice of such Transaction and of the Company's intention to terminate the
Option prior to such Transaction, or


        (d)              
require the successor corporation, following a Transaction if the
Company does not survive such Transaction, to assume all outstanding Options or
to substitute such Options with Options involving the common stock of such
successor corporation on terms and conditions necessary to preserve the rights
of Participants.


12.              
Severability.  Whenever possible, each provision of this Plan
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Plan is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Plan will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.


13.              
Remedies.  Each of the Company and any Participant will be
entitled to enforce its rights under this Plan specifically, to recover damages
and costs (including reasonable attorneys' fees) caused by any breach of any
provision of this Plan and to exercise all other rights existing in its favor. 
Each Participant and the Company acknowledges and agrees that money damages may
not be an adequate remedy for any breach of the provisions of this Plan and
that any party may in its sole discretion apply to any court of law or equity
of competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Plan.


14.              
Business Days.  If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or holiday in the
state in which the Company's chief executive office is located, the time period
shall be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.


15.              
Governing Law.  All issues concerning this Plan will be governed
by and construed in accordance with the laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision of rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the law of any jurisdiction other than the State of
Delaware.  Each of the Company and each Participant waives the necessity
for personal service of any and all process upon it and consents that all such
service of process may be made by registered or certified mail (return receipt
requested) or an overnight courier with delivery confirmation, in each case
directed to such party in accordance with the notice requirements set forth in
this Plan, and service so made will be deemed to be completed on the date of
actual receipt.  Each of the Company and each Participant consents to service
of process as aforesaid.  Nothing in this Plan will prohibit personal service
in lieu of the service by certified or registered mail or an overnight courier
with delivery confirmation contemplated herein.


16.              
Notices.  Any notice required or permitted under this Plan or any
agreement executed and delivered in connection with this Plan shall be in
writing and shall be either delivered by reputable overnight courier with
delivery confirmation, personally delivered, or certified or registered mail,
return receipt requested, to any Participant at the address indicated in the
Company's records for such Person, and to the Company at the address below
indicated:


Notices to the Company:

 




Seitel Holdings, Inc.


c/o ValueAct Capital Master Fund, L.P.


435 Pacific Avenue, 4th Floor


San Francisco, CA  94133


Attention:          Allison Bennington, General Counsel




or such other address or to the
attention of such other person as the recipient party shall have specified by
prior written notice to the sending party.  Any notice under this Plan shall be
deemed to have been given when so delivered or mailed.